Hewitt Associates Study Reveals Salary Increases Set to Stabilize in Asia Pacific

Hewitt Associates Study Reveals Salary Increases Set to Stabilize in Asia Pacific

December 04, 2006

The Average Overall Salary Increase Budget in CHINA Ranged from 7.5% to 8.4% in 2006. Few Companies Reported a Salary Freeze This Year.

    SHANGHAI, China, Dec. 4 /Xinhua-PRNewswire/ -- Asia's
markets have maintained steady growth in the last year,
which has led to a stabilization of salary increases in
most markets during 2006.  Though employers are reporting
pay increases, the hikes are modest in comparison to
previous years, and this trend looks set to continue in
2007, according to the 7th annual Asia-Pacific Salary
Increase Survey conducted by Hewitt Associates, a global
human resources services company. 

    This year, India once again reported the highest
average salary increase at 13.8%, compared with 14.1% in
2005.  For the second year in a row, The Philippines
recorded an average overall salary increase of 8.2%, while
salaries in China rose by 8%, down from 8.3% last year.  As
Singapore's economy continued to strengthen, employees
experienced average salary increases of 4.6%, up from 3.9%
in 2005 and demonstrating one of the largest year-on-year
hikes.  Meanwhile, Thailand and Malaysia saw raises of 6.5%
and 6.2% respectively, marking an increase from 6.3% and
5.6% in 2005.  Salaries also rose in Australia, Korea and
Hong Kong.

    "While organizations are being driven to increase
their spend on compensation as a result of the ongoing
attraction and retention challenges we are facing in Asia,
many companies are reassessing their human resources
strategies and broader business goals to ensure they are
getting the most out of their talent and increasing
productivity," said Nishchae Suri, head of Hewitt's
Talent and Organization Consulting Analytics practice in
Asia.

    Increasing Market Orientation
 
    With the pressure to retain key talent growing, an
increasing number of organizations are ensuring their pay
is competitive by closely monitoring market movements. 
Over 80% of participating organizations review their
markets annually, using multiple sources of information to
benchmark compensation, such as industry surveys and
information through personal contacts.  While 81.6% of
participating organizations continue to practice industry
benchmarking, a record 20.2% are now benchmarking against
best-in-class companies. 

    Rising Variable Payouts 

    Hewitt's study indicates that variable pay continues to
be an important means of attracting and retaining talent,
with 78% of responding organizations using them. 

    Individual performance awards continue to be the most
popular, with 56.2% of responding organizations saying they
are their preferred type of variable pay plan.  They also
indicated individual performance awards have the highest
impact on business results, followed by business incentive
plans and team awards. 

    According to the study, companies increased variable
payout in 2006 to 14.9% of their payroll, up from 14.5% in
2005.  This year, target variable payout was highest for
senior/top management at 21.8%, and is expected to rise to
22.3% in 2007. 

    Hewitt's study also highlights that the prime challenge
faced by organizations in implementing variable pay plans is
poor communication of their objectives and measures to
employees. 

    Jean Lin, head of Hewitt's Talent and Organization
Consulting Analytics practice in China, commented,
"Rewards are an emotive issue with employees and it is
of paramount importance that companies not only house a
fair, transparent reward system, but also properly
communicate guidelines to employees.  Despite this, an
alarming number of organizations still fall short when it
comes to communicating pay decisions to employees.  There
is clearly a huge gap between what employees want to know
and what organizations are sharing."

    Achieving Business Objectives Through Rewards

    Though organizations have the right intent when it
comes to fostering a healthy performance and reward
culture, most said they are only partially achieving their
objectives of attracting, engaging and retaining talent, as
well as achieving business results.  At 60.1%, more than
half of participating organizations said their reward
programs do not achieve the desired outcome because of
budgetary constraints, while 33.3% cited lack of
communication as the primary reason.

    About Hewitt's Salary Increase Survey

    Hewitt surveyed more than 1,400 foreign, locally-owned,
and joint-venture companies this year, making this the most
comprehensive salary study in Asia Pacific to date.  The
survey covered 11 markets including Australia, China, Hong
Kong, India, Japan, Korea, Macau, Malaysia, the
Philippines, Singapore, Taiwan, and Thailand.  It measured
actual and projected salary increases, and compensation
practices for five specific job categories, namely
senior/top management, manager,
professional/supervisor/technical, clerical/support, and
manual workers. 

    To obtain a copy of the individual market reports,
please email [e-mail] .

    About Hewitt Associates

    With more than 60 years of experience, Hewitt
Associates (NYSE: HEW) is the world's foremost provider of
human resources consulting and outsourcing services.  The
company consults with more than 2,400 organizations and
administers human resources, health care, payroll and
retirement programs on behalf of more than 350 companies to
millions of employees and retirees worldwide.  Located in 35
countries, Hewitt employs approximately 22,000 associates. 
For more information, please visit
http://www.hewittasia.com .

    Asia-Pacific Salary Increase Survey 2006-2007 Market
Highlights

    China

     -- Information was collected from 365 organizations.
     -- 3% of survey respondents reported a salary freeze
for 2006, while 
        less than 2% expect a salary freeze in 2007.
     -- The average overall salary increase budget ranged
from 7.5% to 8.4% 
        for the five employee groups surveyed in 2006, and
from 7.1 % to 
        8.5% for 2007.  Middle management received the
highest increase at 
        8.4% in 2006.
     -- 69% of participants reported having a variable pay
plan, with gain 
        sharing/productivity awards and team awards
remaining popular.  
        Generally, the percentage of cash compensation
devoted to variable 
        pay increases with the level of seniority. 
     -- At 22%, senior/top management received the highest
percentage of 
        variable pay in total cash compensation.
     -- 48.7% of participating companies position their
salary by comparing 
        base salary with the market, while only 19%
benchmark total 
        guaranteed pay with the market.
     -- 65% of participating companies offered fixed
bonuses to their 
        employees in 2006.
     -- 38% of participating companies offer long-term
incentives, typically 
        stock options.

    For more information, please contact:	

     Jihann Moreno
     Tel:   [phone]
     Email: [e-mail]

     Melinda Earsdon
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Hewitt Associates